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#RandReport: Rand, stocks weaken on talk of cabinet reshuffle

By 1530 GMT, the rand had weakened 0.4% to 13.5500 per dollar.

Picture: EWN.

JOHANNESBURG - The rand weakened on Monday, dragged lower by renewed speculation that President Jacob Zuma might reshuffle his cabinet, a move that could remove Pravin Gordhan as Finance minister.

On the stock market, financial shares were weaker as the rumours weighed on banking stocks for a second session.

By 1530 GMT, the rand had weakened 0.4% to 13.5500 per dollar. It had reached a low of 13.6875 earlier, after rumours on Friday that top ministers might be sacked hit demand for the currency and for local bonds.

On Sunday it was reported that former Eskom boss Brian Molefe was being readied to be sworn in as a member of Parliament, paving the way for President Jacob Zuma to replace Gordhan as head of the National Treasury.

"Even though Gordhan's replacement is not our base case scenario, we see potential for the rand's further depreciation in the near term with the USD/ZAR possibly surpassing 13.80," market analysts at 4Cast said in a note.

In court documents on Monday, Gordhan accused the Gupta brothers, a trio of wealthy businessmen with ties to Zuma, of carrying out an "organised campaign" against him and the Treasury.

The brothers were investigated last year by the country's anti-corruption watchdog over allegations they wielded undue influence over Zuma. They and Zuma have denied any wrongdoing.

Bonds were weaker, with the benchmark bond due in 2026 adding 7 basis points to 8.94%.

On the stock exchange, most of the blue-chip stocks closed lower, with the banks and MTN the biggest losers.

The benchmark Top-40 index slid 0.6% to 45,851 points. The broader All-Share index declined 0.6% to 52,661 points.

Banking shares lost ground on the cabinet reshuffle rumours, said Sanlam Private Wealth director Greg Katzenellenbogen. The banking index shed 1.4% to 7,333 points, with Standard Bank leading the decline, closing 2.2% lower on R141.03.

"The banks continue to come under pressure - the markets don't like this uncertainty," Katzenellenbogen said.

MTN also lost ground, shedding 3.5% to R124.02. The shares fell on worries about earnings in Nigeria, its largest market, as the Nigerian currency weakened to more than 500 against the dollar on the black market, Katzenellenbogen said.

Bullion producers rose as the price of gold gained support from the uncertainty created by U.S. President Donald Trump's move to ban travel to the United States from seven Muslim-majority countries, as well as by elections in Europe.

Harmony Gold gained 5.8% to R33.80 after flagging a sharp jump in half-year earnings, and Anglogold Ashanti rose 4.5% to R166.70.

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